THE DETERMINANTS OF INDUSTRIAL SECTOR GROWTH IN THE NIGERIAN ECONOMY

ABSTRACT
This study assessed the determinants of industrial sector growth in the Nigerian economy. The consistent yearly decline in the nation’s GDP especially in the 2016 annual report prompted this study. The need to unravel the problem of the Nigerian economic sectors necessitated studying the determinants of sectoral growth from 1986 - 2016. From the literature the following variables were identified as major determinants of sectoral growth in Nigeria; exchange rate, inflation rate, interest rate, export and import. The Augmented Dickey Fuller technique in testing the unit root property of the time series was used to test the stationarity of these variables. Johansen’s co-integration test was also used to establish the long- run relationships between the variables. The Ordinary Least Square (OLS) multiple regression model was adopted to determine the relationship between these determinants and the growth of the industrial sector for a period of thirty (30) years. The results showed that there was an overall significant relationship between the growth of the industrial sector and the determinants during the period under study. Three determinants of industrial sector growth (the Nigerian economy proxied by GDP, interest rate and exports had positive and significant impact on industrial sector growth in the Nigerian Economy while exchange rate had negative but a non-significant impact on industrial sector growth rate, Inflation rate had a positive and non-significant impact on industrial sector growth. Imports had a negative and significant impact which implies that over dependence on imported goods is inimical to the growth of industries. The study therefore recommended that the government should ensure a stable and enabling environment for industrial and production activities in the country. A strong policy and effective harmonization of the monetary policy on exchange rate which could also stabilize the interest rate in the economy should be maintained. The government should also harness the vast natural resources available in the country to promote the growth of local industries e.g the lime stone in Okpella, Edo State and the coal in Enugu etc. The adoption of export promotion strategy as emphasize by SAP in1986 should also be sustained.